Ex Parte Bell et al

Patent Trial and Appeal Board

Mar 29, 2018

14203807 (P.T.A.B. Mar. 29, 2018)

UNITED STA TES p A TENT AND TRADEMARK OFFICE
APPLICATION NO. FILING DATE FIRST NAMED INVENTOR
14/203,807 03/11/2014 Simon Wannasin Bell
27997 7590 04/02/2018
Hultquist IP
P.O. Box 14329
Research Triangle Park, NC 27709
UNITED STATES DEPARTMENT OF COMMERCE
United States Patent and Trademark Office
Address: COMMISSIONER FOR PATENTS
P.O. Box 1450
Alexandria, Virginia 22313-1450
www .uspto.gov
ATTORNEY DOCKET NO. CONFIRMATION NO.
166.0017 7445
EXAMINER
MERCHANT, SHAHID R
ART UNIT PAPER NUMBER
3693
NOTIFICATION DATE DELIVERY MODE
04/02/2018 ELECTRONIC
Please find below and/or attached an Office communication concerning this application or proceeding.
The time period for reply, if any, is set in the attached communication.
Notice of the Office communication was sent electronically on above-indicated "Notification Date" to the
following e-mail address( es):
hip@hultquistip.com
PTOL-90A (Rev. 04/07)
UNITED STATES PATENT AND TRADEMARK OFFICE
BEFORE THE PATENT TRIAL AND APPEAL BOARD
Ex parte SIMON W ANNASIN BELL and
FRANK PAK-HO SIU
Appeal2017-001019
Application 14/203,807
Technology Center 3600
Before JOSEPH L. DIXON, CATHERINE SHIANG, and
JASON M. REPKO, Administrative Patent Judges.
DIXON, Administrative Patent Judge.
DECISION ON APPEAL
Appeal2017-001019
Application 14/203,807
STATEMENT OF THE CASE
Appellants appeal under 35 U.S.C. § 134(a) from a rejection of claims
1-9. We note that this application is a divisional application of serial
number 13/503,698. We have jurisdiction under 35 U.S.C. § 6(b ).
We affirm.
The claims are directed to methods and apparatus for improving factor
risk model responsiveness. Claim 1, reproduced below, is illustrative of the
claimed subject matter:
1. A computer-based method of estimating a variance of a
factor in a factor risk model comprising the steps of:
storing data for the factor in a memory, wherein said
memory is a non-transitory computer readable medium;
determining a time series history of factor returns for the
factor over a set of historical times by a programmed processor
cooperating with the memory and with software;
calculating a set of exponentially decaying weights with a
fixed half life corresponding to the time series history of factor
returns by the programmed processor cooperating with the
memory and with software;
computing a metric of volatility for each historical time by
the programmed processor cooperating with memory and with
software;
calculating a set of volatility adjustment multipliers by the
programmed processor cooperating with the memory and with
software as the ratios of most recent volatility metric to the
computed volatility metric;
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determining when at least one volatility adjustment
multiplier is outside a predetermined range;
adjusting the at least one volatility adjustment multiplier
to a value in the predetermined range;
computing the factor-factor covariance for the time series
of factor returns using the volatility adjustment multipliers
within the range and any adjusted volatility adjustment
multipliers for any volatility adjustment multipliers determined
to be outside the range by the programmed processor cooperating
with the memory and with software; and
outputting the factor variance as part of a factor risk model
as a user perceived output by an output device.
REFERENCES
No prior art has been relied upon by the Examiner in rejecting the
claims on appeal.
REJECTION
The Examiner made the following rejection:
Claims 1-9 stand rejected under 35 U.S.C. § 101 as being directed to
non-statutory matter because the claim(s) as a whole, considering all claim
elements both individually and in combination, do not amount to
significantly more than an abstract idea.
ANALYSIS
We note that the Examiner has withdrawn the obviousness-type
double patenting rejection due to the filing of a Terminal Disclaimer. (Final
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Act. 3). The Examiner has also withdrawn the prior art rejection in the Final
Office Action. (Id.).
35 U.S.C. § 101 REJECTION
Appellants set forth the same arguments for independent claims 1, 5,
and 9. As a result, we select independent claim 1 as the representative claim
for the group and address Appellants' arguments thereto. With respect to
representative independent claim 1, we will sustain the rejection of claim 1
under 35 U.S.C. § 101, and claims 2-9, which have not been separately
argued. 37 C.F.R. § 41.37(c)(l)(iv).
The Supreme Court:
[S]et forth a framework for distinguishing patents that claim laws
of nature, natural phenomena, and abstract ideas from those that
claim patent-eligible applications of those concepts. First, ...
determine whether the claims at issue are directed to one of those
patent-ineligible concepts. If so, we then ask, "[ w ]hat else is
there in the claims before us?" To answer that question, ...
consider the elements of each claim both individually and "as an
ordered combination" to determine whether the additional
elements "transform the nature of the claim" into a patent-
eligible application. [The Court] described step two of this
analysis as a search for an "'inventive concept"'-i.e., an
element or combination of elements that is "sufficient to ensure
that the patent in practice amounts to significantly more than a
patent upon the [ineligible concept] itself."
Alice Corp. Pty. Ltd. v CLS Bank Int 'l, 134 S. Ct. 2347, 2355 (2014) (citing
Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 72-73
(2012)).
To perform this test, we must first determine whether the claims at
issue are directed to a patent-ineligible concept.
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Although the Court in Alice made a direct finding as to what the
claims were directed to, we find that this case's claims themselves and the
Specification provide enough information to inform one as to what they are
directed to.
The steps in claim 1 result in: outputting the factor variance as part of
a factor risk model as a user perceived output by an output device. The
Specification further states:
The present invention relates generally to the estimation of the
risk, or active risk, of an investment portfolio using factor risk
models. More particularly, it relates to improved computer based
systems, methods and software for more accurate estimation of
the risk or active risk of an investment portfolio. The invention
addresses techniques allowing a factor risk model's risk
estimates to be more accurate, more stable, and more responsive.
Spec. 1 :9-13. The Specification describes:
Suppose that there are N assets in an investment portfolio and the
weight or fraction of the available wealth invested in each asset
is given by the N-dimensional column vector w. These weights
may be the actual fraction of wealth invested or, in the case of
active risk, they may represent the difference in weights between
a managed portfolio and a benchmark portfolio as described by
Litterman[ R. Litterman, Modem Investment Management: An
Equilibrium Approach, John Wiley and Sons, Inc., Hoboken,
New Jersey, 2003 (Litterman)]. The risk of this portfolio is
calculated, using standard matrix notation, as
(1)
where Vis the portfolio variance, a scalar quantity, and Q is an
N x N positive semi-definite matrix whose elements are the
variance or covariance of the asset returns. Risk or volatility is
given by the square root ofV.
Spec. 5:4--13 (emphasis added). The Specification further states:
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Factor risk models represent the expected variances and
covariances of security returns using a set of M factors, where M
is much less than N, that are derived using statistical,
fundamental, or macro-economic information or a combination
of any of such types of information. Given exposures of the
securities to the factors and the covariances of factor returns, the
covariances of security returns can be expressed as a function of
the factor exposures, the covariances of factor returns, and a
remainder, called the specific risk of each security. Factor risk
models typically have between 20 and 80 factors. Even with 80
factors and 1000 securities, the total number of values that must
be estimated is just over 85,000, as opposed to over 500,000.
In a factor risk model, the covariance matrix Q is modelled
as
(2)
where B is an N x M matrix of factor exposures, I is an M x M
matrix of factor-factor covariances, and 1'12 is a matrix of specific
variances. Normally, 1'12 is assumed to be diagonal.
The factor-factor covariance matrix I , is typically
estimated from a time series of historical factor returns, ft , for
each of the M factors, while the specific variances are estimated
from a time series of historical specific returns.
Spec. 6:8-23. The Specification further discusses the numerous
calculations and algorithms involved in the Dynamic Volatility
Adjustment (DV A) which results in an output. (Spec. 13-22).
Thus, all this evidence shows that claim 1 is directed to a
methodology for improving risk model responsiveness with minimal
negative impact on both the risk model accuracy and stability.
It follows from prior Supreme Court cases, and Gottschalk v. Benson,
409 U.S. 63 (1972) in particular, that the claims at issue here are directed to
an abstract idea. Here, the Specification states the present invention relates
to the estimation of the risk, or active risk, of an investment portfolio using
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factor risk models. (Spec. 1 :9--13). We determine the claims to be directed
to improving risk model responsiveness with minimal negative impact on
both the risk model accuracy and stability-which are at the patent-ineligible
end of the 35 U.S.C. § 101 spectrum. See Alice Corp. Pty. Ltd., 134 S. Ct. at
2356. That is, we find the claimed steps of, storing, determining,
calculating, computing, adjusting and outputting, constitute physical acts by
a human and/or "analyzing information by steps people go through in their
minds, or by mathematical algorithms, without more, as essentially mental
processes within the abstract-idea category." Electric Power Grp., LLC v.
Alstom S.A., 830 F.3d 1350, 1354 (Fed. Cir. 2016). See also buySAFE, Inc.
v. Google, Inc., 765 F.3d 1350 (Fed. Cir. 2014) (claims directed to certain
arrangements involving contractual relations are directed to abstract ideas).
Thus, outputting the factor variance as part of a factor risk model as a user
perceived output by an output device is the result of an "abstract idea"
beyond the scope of § 101.
As in Alice Corp. Pty. Ltd., we need not labor to delimit the precise
contours of the "abstract ideas" category in this case. It is enough to
recognize that there is no meaningful distinction in the level of abstraction
between the concept of mitigating settlement risk in Alice and the concept of
estimating risk, at issue here. Both are squarely within the realm of "abstract
ideas" as the Court has used that term. The claims do not preempt all forms
of the abstraction or may be limited to asset management, does not make
them any less abstract. See OIP Techs., Inc. v. Amazon.com, Inc., 788 F.3d
1359, 1360----61 (Fed. Cir. 2015).
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The introduction of a computer (or computer based method) into the
claims does not alter the analysis at Mayo step two.
[T]he mere recitation of a generic computer cannot transform a
patent-ineligible abstract idea into a patent-eligible invention.
Stating an abstract idea "while adding the words 'apply it"' is not
enough for patent eligibility. Nor is limiting the use of an
abstract idea "'to a particular technological environment."'
Stating an abstract idea while adding the words "apply it with a
computer" simply combines those two steps, with the same
deficient result. Thus, if a patent's recitation of a computer
amounts to a mere instruction to "implement[t]" an abstract idea
"on ... a computer," that addition cannot impart patent eligibility.
This conclusion accords with the preemption concern that
undergirds our § 101 jurisprudence. Given the ubiquity of
computers, wholly generic computer implementation is not
generally the sort of "additional feature[ e ]" that provides any
"practical assurance that the process is more than a drafting effort
designed to monopolize the [abstract idea] itself."
Alice Corp. Pty. Ltd., 134 S. Ct. at 2358 (alterations in original) (citations
omitted).
"[T]he relevant question is whether the claims here do more than
simply instruct the practitioner to implement the abstract idea ... on a
generic computer." Alice Corp. Pty. Ltd., 134 S. Ct. at 2359. They do not.
Taking the claim elements separately, the function performed by the
computer at each step of the process is purely conventional. Using a
computer to take in data, compute a result, and return the result to a user
amounts to electronic data query and retrieval-some of the most basic
functions of a computer. All of these computer functions are well-
understood, routine, conventional activities previously known to the
industry. In short, each step does no more than require a generic computer
to perform generic computer functions.
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Considered as an ordered combination, the computer components of
Appellants' method add nothing that is not already present when the steps
are considered separately. Viewed as a whole, Appellants' claims simply
recite the concept of estimating a mathematical variance of a factor in a
factor risk model and computation of the volatility of a portfolio of assets.
The claims do not, for example, purport to improve the functioning of the
computer itself. Nor do they effect an improvement in any other technology
or technical field. Instead, the claims at issue amount to nothing
significantly more than instructions for estimating a mathematical variance
of a factor in a factor risk model and computation of the volatility of a
portfolio of assets. Under our precedents, that is not enough to transform an
abstract idea into a patent-eligible invention. See Alice Corp. Pty. Ltd., 134
S. Ct. at 2360.
As to the structural claims, they
are no different from the method claims m substance. The
method claims recite the abstract idea implemented on a generic
computer; the system claims recite a handful of generic computer
components configured to implement the same idea. This Court
has long "warn[ ed] ... against" interpreting § 101 "in ways that
make patent eligibility 'depend simply on the draftsman's art."'
Alice Corp. Pty. Ltd., 134 S. Ct._at 2360 (alterations in original).
We have reviewed all the arguments which Appellants have submitted
concerning the patent eligibility of the claims before us which stand rejected
under 35 U.S.C. § 101. (App. Br. 7-11; Reply Br. 1-3). We find that our
analysis above substantially covers the substance of all the arguments that
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have been made. But, for purposes of completeness, we will address various
arguments in order to make individual rebuttals of same.
Appellants argue "[ t ]he present invention addresses improved
methods for estimating variance of a factor in a factor risk model as further
defined by the claims which do not preempt other and different optimization
strategies." (App. Br. 8). Appellants further present arguments to "an N-
dimensional new factor vector" and "the programming of a computer to do
the steps of claim 1, the computer-based apparatus of claim 8, and the
computer software stored on a non-transitory medium of claim 15" address
language not present in independent claim 1 and claims not before the
Board. (App. Br. 8-9) (emphasis added). Appellants' arguments are not
persuasive because such arguments are not commensurate in scope with the
language of independent claims 1, 5, and 9. See In re Self, 671F.2d1344,
1348 (CCPA 1982) (limitations not appearing in the claims cannot be relied
upon for patentability).
We disagree with Appellants, because the Examiner finds, as do we
above, that the limitations in independent claim 1 set forth or describe the
abstract idea are [e.g.]: storing, determining, calculating, computing,
adjusting and outputting. (Ans. 6). The Examiner goes on to find that,
"[t ]his is a risk problem and is not directed to attempting to solve a computer
technology problem. There is no improvement to any computer technology.
The computers, processors, servers, and networks used for updating or
modifying data or information is old and well known and routine in the art
of risk management." Id. (emphasis omitted).
Appellants argue "[ t ]he present claims are clearly analogous to those
in DDR Holdings, LLC v. Hotels.com et al., 113 USPQ2d 1097 (Fed. Cir.
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2014) where it was held that solving an Internet-centric problem with a
claimed solution that is necessarily rooted in computer technology." (App.
Br. 9). Appellants further argue "the present invention is necessarily rooted
in computer technology and clearly is identified as addressing problems in
balancing prediction accuracy, stability, and responsiveness in risk model
predictions, as addressed at length in the Background of the Invention."
(App. Br. 9)
We disagree with Appellants. As found supra, the Specification
makes it clear claim 1 is directed to a methodology for improving risk model
responsiveness with minimal negative impact on both the risk model
accuracy and stability. Moreover, the Specification is explicit in stating
"[ o ]ne likely scenario is that the system of the invention will be
implemented as a personal computer or workstation which connects to a
server 28 or other computer through an Internet or other network connection
26" (Spec. 11: 19--22 ), and "algorithms may be suitably implemented as
software stored in memory and executed by a processor or processors in
computer 12. Data may be input by a user or retrieved from a database or
other storage" (Spec. 13: 15-17) with no further details of the computer or
software.
We disagree with Appellants because in DDR, the claims at issue
involved, inter alia, "web pages displays [with] at least one active link
associated with a commerce object associated with a buying opportunity of a
selected one of a plurality of merchants" (claim 1 of US 7 ,818,399). There
is no such claim element with this degree of detail here before us in the
present patent application disclosure. All that is required by the claims are
generically recited "computer-based" method or apparatus.
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Finally, Appellants argue, "that further adjustment carries throughout
the claimed process to solve specific problems with risk models in a manner
similar to the way in which Internet-centric problems were solved in DDR
Holdings. Unconventional steps and elements confine the invention to a
particular useful application." (App. Br. 10-11 ).
We disagree with Appellants. This is an effect, and not a specific
means or method that improves the relevant technology. The question is
whether the claims as a whole "focus on a specific means or method that
improves the relevant technology" or are "directed to a result or effect that
itself is the abstract idea and merely invoke generic processes and
machinery." McRO, Inc. v. Bandai Namco Games Am. Inc., 837 F.3d 1299,
1314 (Fed. Cir. 2016). In this case, claim 1, as a whole, is focused on the
idea of estimating a mathematical variance of a factor in a factor risk model
for computation of the volatility of a portfolio of assets which is not directed
to patent eligible subject matter.
Reply Brief
Appellants argue that the words of the claims taken as a whole
contradict the analysis of the Answer establishing it as a gross
oversimplification of the claims and a critical failing of that analysis. (Reply
Br. 2). We disagree with Appellants and find Appellants' arguments in the
Appeal Brief, discussed above, merely identified the problems with the risk
models, and identify the present invention as an improvement thereto.
Appellants further contend that
[a]t pages 9 and 10, the Appellant's Brief addresses at length
technological problems addressed by the present invention. The
Answer turns the analysis required by McRo and the precedents
cited thereby on their head concluding because a computer is
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employed the technological improvement is somehow irrelevant.
Such a conclusion is contrary to McRo.
(Reply Br. 2). For the reasons discussed above, we disagree with
Appellants' argument and Appellants have not shown error in the
Examiner's conclusion of a lack of patent eligible subject matter of
independent claim 1.
CONCLUSION
The Examiner did not err in rejecting claims 1-9 based upon a lack of
patent eligible subject matter.
DECISION
For the above reasons, we sustain the Examiner's rejection of claims 1
-9 based upon a lack of patent eligible subject matter.
No time period for taking any subsequent action in connection with
this appeal may be extended under 37 C.F.R. § 1.136(a)(l )(iv).
AFFIRMED
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